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How a 6% Budget Increase Can Actually Be a 45% Decrease

May 19, 2017

The President’s budget release, scheduled for next Tuesday, May 23, is a big day with powerful implications for FDA’s future. The Alliance will be working quickly to analyze the FDA portion of the budget and distribute our conclusions as soon as we can. For background on differences between budget authority (BA) funding and user fees (UF), see here.

In the meantime, we know that OMB will paint an unjustifiably rosy portrait of what is being proposed. Misdirection is easy to achieve: FDA’s request is always difficult to understand, representing a mix of budget authority (BA/taxpayer) funding, existing industry user fees, and proposed new industry user fees that often have a limited probability of being enacted. Based on the President’s budget blueprint (known as “the skinny budget”) we already know that the President is likely to derive budget savings by cutting FDA’s BA appropriation by about a billion dollars and replacing those dollars with new industry user fees that have never been discussed and have no possibility of being enacted.

In order to illustrate the likelihood of confusion, I am going to propose a headline that sounds particularly attractive:

Amidst Massive Cuts, President Proposes Nearly 6% Funding Increase for FDA.

As can be seen in this chart, the underlying budget proposal that would support this conclusion is anything but status quo. Among other things, it leaves the agency vulnerable to more than a 40% cut in BA funding, with no possibility of offsetting user fees.

The actual numbers in the President’s proposal are likely to differ from those in our hypothetical. If you need clarification — either about this hypothetical chart or the actual numbers when released on Tuesday — please contact me at sgrossman@strengthenfda.org or 301-539-9660.

FY 17
(approx.)
FY 18
Based on Hypothetical
6% Increase
Annotation
BA — Total $2.750 billion   $1.500 billion Decrease of $1.25 billion;
45% decrease
BA — Food* $1.375 billion $1.125 billion Almost 20% decrease
BA — Med Products* $1.375 billion $0.375 billion More than 70% decrease
User Fees — Existing $2.083 billion   $2.363 billion Increase: $0.280 billion
PDUFA, GDUFA, BsUFA, MDUFA $1.357 billion $1.600 billion Amount in House & Senate
UF Reauthorization
Tobacco $0.635 billion $0.672 billion By law
Misc Small Fee Prog. $0.091 billion $0.091 billion Assumes no change
User Fees — Proposed       Increase $1.250 billion
Medical Products $1.000 billion If proposed — DOA
Food Products $0.250 billion If proposed — DOA
FDA BA/UF TOTAL $4.835 billion   $5.115 billion 6% Increase; Actually
a Massive Cut

* Based on page 6 (page 14 in the document) of <a href="https://www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/BudgetReports/UCM485237.pdf&quot; target="_blankthe FDA’s proposed budget for FY 17.

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